What is the ISM Manufacturing Index?
ISM Manufacturing Index is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at over 300 manufacturing firms. It takes into account new orders, production, employment, supplier deliveries, and inventories. All with equal weighting and adjusted for seasonality. This index is also known as the Purchasing Manager’s Index (PMI).
A PMI reading over 50 shows growth in the manufacturing sector while a reading below 50 suggests contraction. A reading at 50 would suggest no change from the previous month.
Why is the ISM Manufacturing Index valuable?
The ISM Manufacturing Index is considered a key indicator of the U.S. economy as it highlights changes in production levels and demand for products from month to month. Released at the beginning of every month makes it one of the earliest indicators of economic activity. The data provided by it every month can heavily influence investor and business confidence.
What should you do?
If you’re looking to better understand where the U.S. economy is the ISM Manufacturing Index is the place to start. It will help provide a better understanding of economic trends and conditions. For example, if the index is rising you can anticipate a bullish stock market. Majestic’s CORE Report follows the ISM Manufacturing Index; along with other indicators every week to see where the market stands.